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Silicon Valley may think it has all the creative geniuses firmly ensconced in its back pocket, but it won't be long before the next big challenge pulls them all away.
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Entrepreneurial Ego

Silicon Valley may think it has the creative geniuses in its back pocket. But it won't be long before the next challenge pulls them away

You heard it here first: Silicon Valley is dead. Bottom fishers, get ready, because property from Palo Alto to Foster City will soon be cheaper than swampland in Mississippi. Why? Because the techies will be flooding away and streaming to the laboratories that have patents poised to exploit the soon-to-be-completed mapping of the human genome.

Forget about Cisco, Intel, or Oracle drawing talent from across the nation with the lure of cutting-edge careers. By 2001 the knowledge workers will be flocking to the gene-hunting companies. Soon thereafter Silicon Valley will look like a ghost town.

Riches from a dot-com with a market capitalization greater than the wealth of Brunei? That's a bunch of hooey to someone with a penchant for entrepreneurship. But give that go-getter the challenges that Columbus, Lewis and Clark, and John Glenn had when they ventured into uncharted territory, and you will witness a psychological coup d'etat.

Lest you think I've lost my mind altogether, let me say that I know that the information-technology revolution has, practically speaking, just begun. And of course it's hyperbole to say that the IT juggernaut will implode. But it's not exaggeration to say that once the human-genome project is complete, Silicon Valley will never again look like Mecca to entrepreneurs. Since the Valley's beginnings the spirit of the place has changed completely. During the move from musty garages to multi-acre campuses, the dominant IT companies in Silicon Valley -- those that have been gobbling up start-ups for the past 10 years -- have forgotten their roots. Those successful start-ups became mature businesses saddled with the same sorts of bureaucratic baggage as the Fortune 500 giants that preceded them.

Much of the behavior that sets authentic entrepreneurs apart from managers or other professionals stems from a psychological sixth sense about how to capitalize on new, untested opportunities. Some people characterize entrepreneurs as the Don Quixotes of the business world because they thrive on dreaming the impossible dream, but if I were asked for a musical characterization of an entrepreneur, I would think of Cole Porter's "Don't Fence Me In." Entrepreneurs like nothing better than the freedom to be on the cutting edge of "new," and the potential to do that makes any other career option feel like punitive constraints.

The personal-development history that gives rise to autonomy seeking and quixotic behavior in entrepreneurs often stems from mild to moderate feelings of antagonism or ostracism. (I emphasize mild to moderate -- I am in no way suggesting that entrepreneurs are antisocial outcasts or are psychologically disordered.) The kids elected prom king and queen gravitate toward established career paths because they helped to define, and are rewarded by, the status quo. The less mainstream types, the Future Entrepreneurs of America, desirous of creating alternatives to the status quo, find that a novel product or process is their ticket to respectable and lucrative freedom.

Paradoxically, the profound success that the IT revolution has had will make Silicon Valley unappealing to entrepreneurs when it is contrasted with the full-blown potential of the human-genome project. After analyzing the decline of entrepreneurial ventures that failed to sustain success as expected, I have concluded that whenever entrepreneurial ventures succeed, stresses ensue. Chief among the failures born of success are the elimination of market niches due to changes in the business environment; the imposition of ineffective management on highly competitive, challenge-seeking entrepreneurs; and management's lack of planning for the inevitable boredom and burnout. Those factors cause a state of psychological rigidity, which, in turn, leads to companywide risk aversion and bureaucratic management that strives to avoid loss rather than to pursue innovation.

And because the dot-com pioneers have been so successful so fast with their outside-the-box creativity, they've accelerated the need -- a need perceived by the venture capitalists who dumped billions into their start-ups -- for professional management. As a result, I believe some very wise money managers are making some very masochistic and shortsighted moves to protect their investments. Why masochistic? Because by installing professional managers as rapidly as they have, the VCs backing the new entrepreneurs may have done the one thing guaranteed to alienate subsequent generations of entrepreneurs: impose constraints upon folks who won't be fenced in.

I hope that all you IT business builders will heed my wake-up call. It would have been unfair of me to withhold what I know could save your collective bacon. Don't fence in the entrepreneurs. Instead, fence out the bureaucrats. Ignore my warnings at the peril of your real estate.

Dr. Steven Berglas is a clinical psychologist and management consultant on the faculty of the Harold Price Center for Entrepreneurial Studies at UCLA's Anderson School of Management and of Harvard Medical School's Department of Psychiatry.


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Last updated: May 1, 2000




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